Norada Real Estate Investments

Last Weeks Impact on the Housing Market

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If you stop and think about it, it was the housing market collapse that pulled these large financial institutions down over the last several weeks.

Fannie Mae and Freddie Mac owned or guaranteed one-half of the $12 Trillion mortgage market.  Lehman Brothers had over $60 Billion in mortgage related assets on its books.

This has all led to a credit bubble burst in the shadow of the housing “bubble”.  So what happens if credit tightens even more because money isn’t available to the financial system?  Simply put, we may see house prices fall even further in most parts of the country because those who want to buy won't be able to.

If the housing market doesn’t stabilize, then the financial market won't either.  Are we talking a year or two from now?  There is strong evidence that the worst hasn’t even happened yet – particularly in states like California and Florida.  You can expect to see banks taking back and unloading a lot of inventory over the next twelve months or more.

In the meantime, focus your real estate investing in markets that have strong economic fundamentals to maximize your short and long term appreciation and overall return on investment.

Do Higher Gas Prices Mean Lower Consumer Spending?

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The short answer is “extremely unlikely”.  The reason is that a small increase in some costs (like gas) only creates a marginal shift towards other costs (not a decrease in those costs).

One of the most important commodities in a first world economy such as ours is gas and other energy sources.  If there is a rapid rise in energy costs, it could lead to a significant increase in overall prices – this is known as inflation.

The question now becomes: Is the rise in gasoline prices strong enough to create an inflationary trend that will stall growth in consumer spending?

While millions of households feel the pinch of decreasing discretionary income due to higher gas prices, the fact of the matter is that this will only be a hiccup in the U.S. economy.  Overall spending and consumption will continue at a similar pace.

At the end of the day, if we walk away with long term gains in energy efficiency then the next generation of households will benefit from their own increase in discretionary income.

2007 Top 20 U.S. Tourism Destinations

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The 2007 annual ranking of the nation's leading tourism destinations compares domestic and international tourism spending, tourism job creation, and the degree to which each city's economic vitality is dependent upon visitors. The results show that a significant gain in international visitors propelled New York City to the top spot in 2007.

Rank City Rank change from 2006
1 New York City +2
2 Orlando -1
3 Las Vegas -1
4 Los Angeles 0
5 Chicago 0
6 San Francisco 0
7 Washington, D.C. +1
8 San Diego -1
9 Miami +3
10 Atlanta -1
11 Phoenix 0
12 Tampa -2
13 Dallas 0
14 Honolulu +1
15 Houston -1
16 Santa Ana +1
17 Boston -1
18 Seattle +2
19 Philadelphia -1
20 Virginia Beach +5

The U.S. City Tourism Impact, recently released by Global Insight, combines domestic and international travel volumes and spending data from D.K. Shifflet & Associates, as well as the U.S. Department of Commerce's Office of Travel and Tourism Industries with metropolitan area economic data and models from Global Insight to rank the most popular tourist destinations in the U.S.

Another Sign of a Market Turnaround?

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Last month resales jumped 3.1% to the highest level in half a year.  Additionally, new home sales jumped 2.1% according to the Commerce Department.  This came as a mild surprise to Wall Street.

Resales were up all around with the West leading the country with a  solid 9.7% increase.  Following that was the Northeast with a 6% gain, the Midwest with a 1% gain and the south with a minor drop of 0.5%.

New home sales showed a similar pattern with the Northeast gaining a 39% increase, the West with a 10% increase and the Midwest with an 8.2% jump.  The south had a drop in new home sales with a 2.5% drop.

Can this be another sign of a market turnaround?  Although this is very good news, we must keep some facts in perspective.  A large number of these sales come from first time home buyers and real estate investors sitting on the fence waiting for a clear signal that prices may have bottomed.

[Read more…]

Resales Up, Rates Down

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There are more signs of improvement in the real estate markets around the country.

Nationally, sales were up by 2% in May with the Midwest reporting a 5.5% increase and 6% in the Northeast. Condo sales also jumped up by 6% nationwide. Even some of the hardest hit markets showed increases including Sacramento, CA, Sarasota, FL and battle Creek, MI.

Mortgage rates took a welcomed dip recently reversing the upticks over the previous weeks. Thirty years fixed rate loans are back under 6.4% and fifteen year rates are under 6%.

It’s going to take more than lower interest rates and increased sales to help the housing market recover, but they are positive signs in the right direction. Along with increased prices in the hardest hit markets we should begin to see the beginning of a recovery.

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(949) 218-6668
(800) 611-3060
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